Tags: EU | Europe | Financial | Crisis

Greek Premier: EU Took Too Long to Show Support

Friday, 12 Feb 2010 10:03 AM

Greek Prime Minister George Papandreou on Friday criticized the European Union as "timid" and too slow to express unified support for his country during its financial crisis, a day after Greece won backing — but no detailed bailout plan — at an EU summit.

Speaking during a Cabinet meeting on his return from the meeting Thursday in Brussels Papandreou said that while the country had received a statement of support, delays and conflicting statements over the past few months had made things worse.

"In the last few months of this crisis, the EU gave its political support. There is also institutional support of our program," Papandreou said during the Cabinet meeting.

"But in the battle against the impressions and the psychology of the market, it was at the very least timid," he said.

"For what the future holds regarding the crisis there were, in the last months in the EU, multiple voices, differences and diverging statements. Speculation about our country which created a psychology of imminent collapse. Prophesies which risked becoming self-fulfilling."

Greece's debt crisis has plunged the euro, the currency used by 16 EU nations, into the worst turmoil it has seen since it was launched 11 years ago.

Papandreou, who took office in October, blamed the previous government's "criminal policies" for falsifying statistics that meant the incoming Socialists had to revise the budget deficit figures to 12.7 of economic output for 2009, far above the 3.7 percent estimated the previous spring.

The markets have hammered Greece in recent weeks, pushing up the spreads, or difference between 10-year Greek bonds and a the German benchmark bonds which measure the market's perception of a risk of default. Greece's problems have also weighed on the euro.

"There was a lack of coordination between the various bodies of the Union, the Commission, the member states, the European Central Bank. Even differing opinions within those bodies," Papandreou said, adding that there were divergent opinions as to what should be done: "multiple doctors with differing prescriptions over the patient that is Greece."

On Thursday in Brussels, the 16 eurozone countries promised to "take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole."

But they left out any detail about what they might do to prevent the country from defaulting on its massive debt, and markets reacted coolly.

The spreads on Greek 10-year bonds rose to 2.98 percentage points Friday afternoon, up from about 2.70 percentage points on Thursday night, but still down from 3.5 percentage points the week before.

The Athens Stock Exchange was down 1.98 percent in late afternoon trading.

Papandreou's government has announced an austerity program that includes freezing civil servants' salaries, cutting bonuses and stipends and hiking taxes and the average retirement age by two years to 63.

Unions have responded with strikes, although turnout for protest marches during a civil servants' strike on Wednesday was low.

Papandreou said that Greece faced a long road to recovery.

"This battle isn't over," he said during the Cabinet meeting.

"I would say it's just beginning, with an important decision by the European Union to support the efforts of Greece, to support the eurozone."

French Finance Minister Christine Lagarde said the "moment of truth" for Greece will come in March and that the European Union and IMF will be watching closely to make sure Athens fulfills its promises to pay off debts.

Asked whether European finance ministers would firm up details of possible aid to Greece at a meeting Monday, Lagarde said in an interview on French radio RMC, "We will discuss it without doubt." She would not elaborate.

"Greece will need financing in the spring. We have an appointment in March to see whether they have done what they said they would do. It will be a moment of truth," she said.

Greece will report back to EU nations in March on progress on its debt-fighting measures, and based on that progress, the EU and the European Central Bank could order tougher action that Greece may find difficult to implement.

The EU is seeking help from International Monetary Fund experts to make that March assessment.

Lagarde said it was "important that we recognize, without seeking IMF financing, that we say there are people whose job it is to go and verify that plans are respected, that measures are taken, and that we will use their expertise in the field to see whether the Greeks are doing what they committed themselves to or not."

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Greek Prime Minister George Papandreou on Friday criticized the European Union as timid and too slow to express unified support for his country during its financial crisis, a day after Greece won backing but no detailed bailout plan at an EU summit.Speaking during a...
EU,Europe,Financial,Crisis
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2010-03-12
 

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